By Sean Poulter
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Families face crippling increases in their water bills of up to 9.3 per cent as foreign-owned suppliers make millions in profit for overseas investors.
News of the inflation-busting bills comes as the cost of essentials for hard-pressed homeowners continues to soar above their pay and pensions.
The industry regulator Ofwat yesterday announced that the average increase will be 3.5 per cent from April 1, taking the typical annual bill up by £13 to £388.
However, millions face much bigger rises depending on their supplier and whether they have a water meter.
Meter customers at South East Water, which supplies 2.1million customers in Kent, Sussex, Surrey, Hampshire and Berkshire, will pay an extra 9.3 per cent, while the increase at Southern Water, which covers much of Kent, Sussex and Hampshire, will be 8.1 per cent.
Britain’s biggest water company, Thames, will raise its water and sewerage bills by an average 5.5 per cent, however its meter customers will pay an extra 7.8 per cent.
Thames, which is owned by investors from Australia, China and Abu Dhabi, said meter customers were being charged more because they are likely to use more water this year following lower use in 2012 thanks to hose bans and heavy rain.
However, customers of South West Water, who have the highest bills in the country, will see an average fall of £40 following a £50 per household government grant. The Institute of Economic Affairs warned: ‘Rising water bills are having a devastating effect on low-income households.
‘In some areas, poorer people are spending more than 10 per cent of their income on water, leaving less for essentials such as food.’
The National Debtline has seen a 257 per cent increase in the number of people asking for help with water bills since 2007, with a record 19,667 calls last year, more than those concerning rent or mortgages. Until recently, water meters could be requested by householders using less than the average amount of water who wanted to cut their bill.
However, firms such as Southern now have the legal power to impose them on all properties in so-called water-stressed areas in what amounts to rationing by price.
The £200 cost of installation is met by the company, which then recoups it through bills.
Despite higher price rises, meter customers tend to pay less than those who are charged according to their home’s rateable value. However this gap is narrowing. South East intends to install meters in 90 per cent of its customers’ homes by 2020.
As of 2010, increases in water bills come in April and are linked to the retail price index level of inflation from the previous November.
But RPI has exceeded forecasts in the last two years, at 5.2 per cent in November 2011 and 3 per cent in 2012, meaning bill rises for 2012 and 2013 have been higher than expected by consumer groups and Ofwat – giving firms bigger profits.
Dame Yve Buckland, chairman of the Consumer Council for Water, said: ‘Companies are making higher profits than expected and they need to give some back to customers. They can limit their own prices or invest more money into services – they shouldn’t keep it all for shareholders and investors.’
Ofwat chief executive Regina Finn said the price rises would help fund £25billion of improvements to the water and sewerage system between 2010 and 2015.
But she added: ‘We understand there is huge pressure on incomes and any rise is unwelcome.’